Archive for the ‘Forms’ Category


 

Why Do I Need an IRS Number When Importing Into the U.S.?

{This post was last updated on August 9, 2017}

You have made your sale, shipped the goods to the U.S. buyer, and the shipment is on its way to the border. And then, without warning, the goods get stopped at the port of entry, and the customs broker for this shipment requests an IRS number. At this point, you are likely wondering what an IRS number is and why it’s needed. To help you understand, let’s dive into this scenario a little deeper.

What is Internal Revenue Services (IRS) Tax Number and Why is it Required?

First off, all goods entering the U.S. from overseas are considered Imports and U.S. Customs and Border Protection (CBP) must approve all Imports for entry. CBP requires documentation which includes shipment details such as the identification of the Ultimate Consignee. An Ultimate Consignee is a person, party, or designee that is located in the U.S. and will receive the shipment (which is usually the buyer of the goods). An Internal Revenue Service (IRS) number, is used by CBP to identify the Ultimate Consignee.

There are two types of IRS numbers:

  1. Employer Identification Number (EIN): Issued to business entities
  2. Social Security Number (SSN): Issued to individuals

 

Without an IRS number, CBP does not know who the Ultimate Consignee is and therefore will not accept the shipment into the U.S.

U.S. Customs states the following.

 

(Source: CUSTOMS DIRECTIVE NO. 3550-079A )

 

Will One IRS Number Cover a Host of Different Goods Sold to One Consignee?

The IRS/EIN or SSN is specific to the Ultimate Consignee as the IRS issues these numbers directly to the company or individual. Therefore, if someone in the U.S. buys a host of products from you, you would declare the IRS number for that buyer on the entry declaration to U.S. Customs.

If you have more than one buyer, then it is best to make a declaration per transaction and declare the IRS number for each buyer in each transaction.

My Shipment DID Have an IRS Number. Why Was it Stopped?

If you run into this scenario, and your import documentation included an IRS number, it could be for one of two reasons. First, the Ultimate Consignee of the shipment had never purchased goods from a foreign party and therefore is not in U.S. Customs database.

Another likely culprit for this delay could be a deactivated account. Deactivation happens when more than a year has passed since the Ultimate Consignee last received an import.  

If the IRS number is not on file or has been deactivated by U.S. Customs, then it will need to be added to their database by filing a Customs Form 5106.

What is a Customs Form 5106?

A Customs Form 5106 is used by U.S. Customs to input the name, physical address, and IRS number of the Ultimate Consignee into their database.  The Customs Form 5106 must be on file for all consignees at the time of entry.

Is a 5106 Required for Every Shipment I Send to the U.S.?

U.S. Customs states that “An importer identification number shall remain on file until one year from the date on which it is last used on Customs Form 7501 or request for services.” This means that as long as the Ultimate Consignee continues to receive goods on a regular basis, this form will only have to be completed once.  If their 5106 importer record is not used for over a year, then they will have to reactivate their number.

How Can I Determine if the U.S. has a Customs Form 5106 on File for the Consignee/Buyer?

Your customs broker can query the Ultimate Consignee information with U.S. Customs and advise you if they have an active 5106 on file.   This is a simple, and proactive step that can save you a lot of hassle.

How Do I File a Customs Form 5106?

If a 5106 is not on file,  you need not worry as your customs broker can supply you with one. You can then ask your buyer to fill it out. One you have received it back from your buyer, you can provide it to your custom broker, who will then submit it to Customs. CBP will then add it to their database.

In summary, if you are selling to U.S. buyers from outside of the U.S. and you are responsible for declaring the goods at the port of entry, you must ensure your buyer has an IRS number. If they do not, work with your customs broker to get one. We are here to help!

 

 

What to learn more about importing into the U.S.?

Get a comprehensive understanding of the process involved with our webinar on U.S. Importing for Beginners [Part 1] (just so you know…it’s free!). Take your learning a step further by attending the U.S. Importing for Beginners [Part 2] webinar and delve into the details previously touched upon in part one of the series.

 

Do you have questions or comments regarding importing to the U.S.? Please leave them in our comments section below and I will be happy to provide an answer.

 

 

 

 

 

2017 Designation Maintenance Begins in our Professional Development Courses!

T if for Trade Compliance Education

A new year means a new start for most everything and this includes a reset to the maintenance requirements of your professional designations set forth by the credential’s governing body. We are well into the year now and our Professional Development Courses for fall 2017 are about to launch.

Whether you are a Canadian or U.S. Certified Customs Specialist (CCS), a Certified Trade Compliance Specialist (CTCS), a Certified Export Specialist (CES), a designate with the Law Society of British Columbia (LSBC) or accounting professional, taking any of Pacific Customs Brokers’ seminars and webinars will earn you maintenance points, credits and hours towards a variety professional designations.

Review and plan your maintenance for the second half of 2017 by clicking on the course’s name below:

(Fall registration opens at midnight on July 15, 2017)

  CSCB NEI LSBC
Webinar CCS CTCS CCS CES  
CDN Importing for Beginners Part 1
CDN Importing for Beginners Part 2
US Importing for Beginners Part 1 1
US Importing for Beginners Part 2 1
FDA Regulated Goods 2 2 1
CFIA Regulated Goods 2 2
NAFTA for Beginners Part 1 1 1
NAFTA for Beginners Part 2 1
 
Seminar
Shipping Perishables – NEW! 5 5 3 3
CDN Trade Compliance Part 1 5 5
CDN Trade Compliance Part 2 5 5 3
Exporting from Canada 5 5 3 3
US Trade Compliance Part 1 5 5 3
US Trade Compliance Part 2 5 5 3 3
HS Tariff Classification 5 6 4
Free Trade Agreements and Rules of Origin 5 5 5
Customs Valuation 5 3.5
CFIA 5 5
FDA 5 5 3
CTPAT 3 3 2 2

 

If you have never attended one of our Professional Development Courses before, the following information might help you decide on attending the next one.

Professional Development Courses – Webinars

Our webinars are designed to meet the demands of the global trade community. These live webinars are a convenient way for trade professionals to stay ahead of new regulations with international trade and gain additional knowledge in key areas. The benefits of attending an online course include:

  • Cost-effectiveness – More affordable than industry standards and some even offered complimentary
  • Global accessibility – Travel is removed from the equation for companies with multiple locations or branches
  • Convenience – Attend from the comfort of your desk
  • Concise training – In a fast-paced industry, efficiency becomes just as important as staying compliant
  • Industry recognized sessions – Earn points towards maintenance of your industry designations

Professional Development Courses – Seminars and Workshops

At these in-person sessions, you will learn the best practices on being compliant as an importer and/or exporter helping you expedite your commercial shipments rather than triggering costly delays. Our experts share their knowledge on international and cross-border shipping to keep you current with customs and participating government agency regulations.  The benefits of attending an in-person seminar or workshop include:

  • All day access – Get our experts to answer your questions one-on-one
  • Case studies and real-life examples – Examine other attendees’ trade compliance issues
  • Cost-effectiveness – More affordable than industry standards
  • Range of topics – Choose from a wide variety of seminar topics
  • Certificate of Completion – Receive a certificate for each course you attend
  • Handouts – Take home your own set of course material
  • Industry recognized sessions – Earn points towards maintenance of your industry designations
  • Networking – Connect with other like-minded professionals

For future reference, download your own 2017 Fall Trade Compliance Program today!

TOP 5 MISTAKES WHEN COMPLETING A NAFTA CERTIFICATE OF ORIGIN

Packing slips, commercial invoices, customs invoices they are all documents that can be easily completed unlike a NAFTA Certificate! What I mean is… you are simply taking shipping or invoicing data – shipper, consignee, carrier name, description of goods, etc. and plugging it into the respective area on one of these documents.

How about the North American Free Trade Agreement (NAFTA) Certificate of Origin? Can you use the same document completion philosophy?  There is much more to a NAFTA Certificate than just “completing another form”.

At a quick glance at a NAFTA Certificate, one might assume that the answer is yes. Exporter — yes. Producer — yes. Importer, description of goods, blanket period — yes, yes, yes. Sounds like we”re on a roll! We read the NAFTA completion instructions, understand what data is required and we”ll just finish this form off to satisfy the foreign purchaser’s request. Right?

Wrong!

The main difference between a NAFTA Certificate and the aforementioned documents is that all the products you list on this document must qualify under the NAFTA Rules of Origin. That’s right – do not simply complete the document. There are rules that must be observed.

As we already noted, some fields on the NAFTA Certificate of Origin are fairly basic and you can easily fill them in. The focus of this article is to provide clarification on the less understood areas to raise awareness of their complexity.

Field 6 — Harmonized System (H.S.) Tariff Classification Number

As emphasized in a previous article, it is very important that the H.S. tariff classification is correctly assigned to each product, as the first six digits will determine which of the NAFTA “Specific Rules of Origin” will apply. In order to correctly qualify the product under these Rules, you must be sure the tariff classification is correct. If you are unsure regarding the tariff classification, please contact a customs broker for assistance.

Field 7 — Preference Criterion

The completion of this field is going to depend on where a product was sourced or manufactured, the extent of the manufacturing and transformation process, and/or the source and place of manufacturing for any raw materials. Note that the preference criterion chosen for one product might not be the same as for another, and each situation will need to be evaluated on its own merit.

Field 8 — Producer

Hey, you get a lucky break! This is one of the easier ones. YES, NO(1), NO(2), and NO(3) are your options. The ‘NO’ options of (1), (2), and (3) refer to what you are basing your NAFTA claim on — whether you ‘just know it is NAFTA eligible’ (1), or you have documentation from the producer that it is NAFTA eligible (other than an NAFTA) (2), or you have a voluntarily provided & accurately completed NAFTA Certificate from the manufacturer (3). We respectfully advise that you go for (3), as this assures that the actual producer has done his due diligence in confirming NAFTA eligibility of the product he is providing to you.

Field 9 — Net Cost

In order to properly complete this field, you will need to understand the NAFTA Specific Rule of Origin applying to a product to determine if Regional Value Content is a factor and whether the Net Cost method will be used. In this field, you will either show ‘NC’ if the Net Cost method was used, or ‘NO’ (all other situations). By the way…NEVER place a dollar amount in this field, as this merely indicates to a customs agency that you did not read the instructions!

Field 10 — Country of Origin

This one sounds simple, doesn”t it? You would be amazed, however, at the number of NAFTA Certificates we receive that indicate countries other than the U.S., Canada or Mexico (remember, it’s the North American Free Trade Agreement). Another common mistake is for someone to automatically assume that just because certain products are made in Canada, the U.S., or Mexico they qualify for NAFTA. In fact, if they do not qualify, they must not be listed on this document.

Sound complicated? In some cases, it is straight forward, but in so many others (for example, products with many foreign components), NAFTA qualification can be an onerous task. The point we are making is for companies and individuals to realize that much care needs to be exercised (before signing, please read the disclaimer at the bottom of the form so you understand your responsibilities).

Repercussions

Lets say we have a NAFTA Certificate that has all the boxes completed with what appears to be correct data.  We clear and account for the goods and bill you.  No duty is paid.  Then 11 months later or more (up to 4 years after the date of release),  Canada Border Services Agency (CBSA)  decides to audit that NAFTA.  They will go to the exporter with a NAFTA Verification questionnaire.  Let’s say CBSA comes to the decision that the goods actually do not qualify.  Guess who suffers for the exporter incorrectly completing the NAFTA?  Your Company.  You get the penalty applied to your importing profile and you have to remit the unpaid duty with interest.

 

So keep that in mind when you see NAFTA Certificates that are not properly completed.  Its a red flag that the supplier actually has no clue whether or not the goods qualify.

 

It should be noted that similar rules apply for any Certificate of Origin relating to a free trade agreement. For instance, if you grab a copy of a Canada-Chile FTA Certificate of Origin, you will notice many similarities.

Still baffled over the completion of this document, or whether or not your goods qualify under NAFTA? If you require advice or have questions related to NAFTA,   feel free to contact our Trade Compliance Department.

 

Notice of eManifest AMPS Penalty Assessments Now Issued at the Border

eManifest, AMPS penalty Notice of Assessments Now Issued at the Border

Call for Feedback on our Topic eManifest, AMPS penalty

 

The Canadian Border Services Agency (CBSA) has announced to the Importing community that effective January 11, 2017 Border Services officers at the First Port of Arrival (FPOA) will be issuing 3 of the 6 eManifest Administrative Monetary Penalties (AMPS) for non-compliance directly from the border. Prior to this, all AMPs for eManifest non-compliance  were sent by Border Services officers to the CBSA Headquarters (CBSA Program Compliance and Outreach Division) for review prior to being issued to the client.

 

The Three eManifest, AMPS penalty items that will be transitioned to the FPOA are:

 

C378

Penalty: Person failed to submit the prescribed pre-load/pre-arrival information relating to their cargo and/or conveyance.

* 1st penalty – $2000.00

                      * 2nd penalty – $4000.00

                      * 3rd penalty – $8000.00

 

Example of C378 non-compliance: When a carrier failed to transmit an electronic conveyance report prior to the conveyance arriving in Canada or when a freight forwarder failed to transmit an electronic house bill prior to the cargo arriving in Canada.

 

Penalized Party: The penalty is applied to the party responsible for providing the required data. This penalty applies when the data was not provided PRIOR to arrival in Canada.

 

One C378 will be issued per instance. The same penalty level will be assessed for all infractions discovered during the same examination.

C379

Penalty: Person failed to submit advance information in the prescribed time or prescribed manner to CBSA.

                       * 1st penalty – $250.00

                       * 2nd penalty – $375.00

                       * 3rd penalty – $750.00

 

Example of C379 non-compliance: When a carrier fails to submit an electronic conveyance report within the prescribed timeframes or when the carrier fails to submit electronic pre-arrival cargo information, however they faxed shipment documentation to the appropriate customs office within the appropriate timeframes.

 

Penalized Party: The penalty is applied to the party responsible for providing the required data. The prescribed information must be transmitted in the prescribed timeframe and in the prescribed manner. These two separate obligations must be respected; a contravention against any one of the two obligations will result in the assessment of this penalty. In instances of non-compliance with timeliness and manner requirements two separate C379 penalties will be applied.

 

In situations where no information was provided prior to arrival C378 will be applied. It should also be noted that with this contravention a 30 day escalation of penalty levels from the first to the second level will apply. Should a second penalty with the same contravention be issued against the same client, the system will not escalate the penalty level to level two unless 30 days have transpired from when the first Notice of Penalty Assessment ( NPA) was issued or the infraction occurred. The non-escalation rule applies only from the first level to the second level.

C382

Penalty: Person submitted information prescribed by the Reporting of Imported Goods Regulations that was not true, accurate and complete.

                              *1st penalty – $500.00

                              *2nd penalty – $750.00

                              *3rd penalty – $1500.00

 

Penalized Party: This penalty is applied to the party responsible for providing the required data.

 

Example of C382 Non-compliance: This penalty applies when the pre-arrival or pre-load information is not true, accurate and complete as indicated by the primary source documents (bill of lading, contract of carriage) at the time of submission.

 

One C382 penalty will be issued per submission regardless of the number of data elements which were not true or accurate, or complete.

 

The 30 day escalation delay as noted in C379 applies to this penalty too.

 

AMPs penalties are issued against the person (company), rather than the goods. A penalty assessed under the AMPs becomes payable on the day the NPA (Notice of Penalty Assessment) is served to the person. An NPA may be either served to the person by hand or sent by registered mail.  If a driver or transporter is issued the NPA then he/she should ensure their company representative is provided a copy of the NPA for payment or Review.

Payment may be made in person or by mail at the issuing office listed on the last page of the NPA or any CBSA office. A copy of the NPA must accompany the payment. Interest is payable on penalties at the prescribed rate, beginning  the date following the date of the NPA. However, if the penalty is paid within 30 days after the date of the NPA, no interest will apply.

 

If you do not agree with the penalty you can ask for a Review of the Penalty Assessment within 90 days of the issuance. The request for review can be made at the port of issuance.

 

CBSA has announced that HQ will be monitoring the issuance of these three penalties at the Port level to ensure national consistency. HQ will also continue to work with companies to assist with compliance.

Let us pull your paperwork together for you before you get to the border! Fill in this form to have our team of experts give you a quote below:

eManifest, AMPS Penalty Call for Feedback on our Topic

When topics as broad as any  international border are being discussed many of us want to be the fly on the wall that hears the discussion. We try to be that fly on the wall for you, our valued readers.

We know that you also want to know how to have your voices heard in that discussion, especially when you are directly affected.

You have questions:

  • How are the field experts responding to eManifest Filings?
  • What are the experts discussing amongst their peers?
  • How is your voice heard in these conversations?

One way to share your voice is to publish your concerns, insights, ideas or expertise online. Each week we publish and share industry news, our insights and reports that impact you as our readers. Do you have something that you would like us to share? Ask? Research for you? Let us know and we will add your requests to our weekly research and publishing goals.

A Valid Certificate of Origin Can Avert AMPS Penalties

AMPS Penalties

 

The Administrative Monetary Penalty System (AMPS) legislation enables the Canada Border Services Agency to levy monetary penalties for non-compliance of specified regulations ranging from $100 up to $25,000 per infraction. This legislation is designed to promote compliance from all sectors of the importing community within the various CBSA regulations.

One of the major areas of concern under this legislation is the Certificate of Origin. Section 35.1 of the Customs Act states that (1) Subject to any regulations made under subsection (4), proof of origin, in the prescribed form containing the prescribed information and containing or accompanied by the information, statements or proof required by any regulations made under subsection (4), shall be furnished in respect of all goods that are imported.an importer or owner of goods must have a properly completed certificate of origin in their possession when claiming preferential tariff treatment for their goods. This means that in order to claim goods duty free under a free trade agreement, you must have a properly completed Certificate of Origin  on file, from the exporter, at the time the goods are accounted for with the CBSA.

Should the CBSA conduct an audit of your company and find that goods have been declared at a lower duty rate using a preferential tariff treatment, and the importer or owner of the goods fail to produce a properly completed Certificate of Origin, the penalties for non-compliance of this regulation are as follows (Master Penalty Contravention Number: C152) :

 

Infraction Penalty
1st $150
2nd $225
3rd and subsequent infraction $450

 

It is important to keep in mind that the penalty is applied per request, regardless of the number of transactions or documents pertaining to that request. Also, there are other AMPS penalties that may be applied by CBSA during the audit due to the exclusion of the certificate.

Proof of Origin will be a major part of any customs audit and obviously the cost of non-compliance is extremely high.

 

NAFTA Certificate of Origin

For anyone importing goods from the USA or Mexico the importance of obtaining a NAFTA Certificate of Origin cannot be stressed strongly enough. As an Importer of Record with the CBSA, it is your responsibility to ensure that all your U.S. and Mexican suppliers provide you with a NAFTA Certificate of Origin for all goods that you purchase from them. And that the Certificate of Origin is:

  • Original
  • Properly completed and
  • Signed

 

When a NAFTA Certificate is not available

If you do not have a NAFTA Certificate of Origin on file and one cannot be obtained within five (5) days from the date of customs release of the goods, the applicable duty must be paid on those goods.

 

If a situation arises whereby you have to pay duty because you do not have a NAFTA Certificate available at the time of release, you can pursue a duty refund by providing a properly completed NAFTA Certificate within one year of the date of release of the shipment in question.

Free Trade Agreement Advisory Services

  • FTA Concierge Services  – For clients with time constraints, we offer convenient FTA Concierge Services. We can solicit FTA certificates directly from your exporters allowing you to do what you do best – run your business.
  • Tariff Classification Consulting – We offer expert analysis for clients seeking guidance on tariff classification. You may know the ins and outs of your business, but we know the intricacies of trade and always look out for our clients bottom line.

Free Trade Agreement Workshops and Webinars

Pacific Customs Brokers also offers workshops and webinars such as the FTAs and Rules of Origin Workshop and a NAFTA Webinar Series that help importers and exporters determine eligibility under various FTA programs and gain a clearer understanding of the regulations and best practices for implementation. Learn more or register here!

 

If you have any questions regarding Rules of Origin or Free Trade Agreement certificates post them in our comments section below or email us at Ask Your Broker.